Small Relief for Struggling Homeowners and Persons Facing Insolvency

Details

Created: Monday, June 28 2021 14:03

Small Relief for Struggling Homeowners and Persons Facing Insolvency

The Personal Insolvency Amendment Act, 2021 (“the 2021 Act”) came into operation on 25 June 2021. The Act makes some noteworthy changes to the Personal Insolvency Act, 2012 (“the 2012 Act”) and to the Personal Insolvency (Amendment) Act, 2015 (“the 2015 Act”).

The changes in the law are aimed at enhancing accessibility to the personal insolvency process for those persons whose incomes have been severely impacted by the Covid-19 pandemic, and to extend the protection afforded to homeowners in default of their mortgage payments.

The main changes brought about by the 2021 Act include:

• A debtor applying for a Debt Relief Notice (the statutory debt restructure designed for debtors with debts not exceeding €35,000 and very little income) is now permitted to hold assets up to the value of €1,500, which is an increase from the previous limit of €400.
• Whereas the 2012 Act provided the Court with the power to extend a Protective Cert by up to 40 days, the 2021 Act provides the Court with the power to make a further extension of up to 40 days in exceptional circumstances, meaning a Protective Cert can now be extended for up to a total of 80 days.
• The time period allowed for referring a proposed insolvency arrangement (which has been rejected by a creditor) to Court is extended from ‘14 days from the date of the creditors’ meeting’ to ‘28 days from the date of the creditors’ meeting’.
• Perhaps the most significant change in the law relates to insolvent homeowners. The 2015 Act introduced a key protection which provided insolvent homeowners with the right to seek review by the Court if their mortgage provider (or other creditors) refuse a reasonable personal insolvency proposal. However, this protection only applied to mortgages that were in default prior to 1 January 2015. The 2021 Act removes the 1 January 2015 condition, meaning all insolvent homeowners can now avail of this provision.
• In seeking to enter an insolvency arrangement, a debtor must attend a meeting with an approved financial adviser. This meeting no longer has to be face-to-face, as it can now be held online.
• In applying for an insolvency arrangement, a debtor may now submit a Statement of Truth (which does not have to be sworn or witnessed), instead of a Statutory Declaration.